J. Forbes Munro
The revival of interest in the business history, as well as the politics, of British overseas trade and investment during the nineteenth and twentieth centuries has brought a welcome shift of attention back towards the merchant houses and trading companies that were so often the intermediaries between British manufacturers and bankers on the one hand and overseas markets and customers on the other. In particular, Stanley Chapman’s identification of British-based ‘investment groups’ and Mira Wilkins’ discovery of clusters of so-called ‘free-standing companies’ as the active agents of British direct investment across the globe (Chapman 1985; Wilkins 1988) have drawn our attention to the diversification activities of the trading firms which were at the heart of many such groups or clusters. More recently, Geoffrey Jones has compared the diversification strategies and organisational structures of British and Japanese trading companies, and concluded that they had many similarities: ‘The challenges centred on access and use of information and the coordination of diverse activities. In both cases networks of enterprises linked by equity, debt, people, trade, and services were preferred to internalization, and relationships were substituted for organization’ (Jones 1996:117). What is also clear from such studies, however, is that the British trading organisations which, between roughly 1850 and 1930, liberally sowed their subsidiary and affiliate concerns across the world, differed one from one another in the nature, timing, causes and outcomes of their diversification processes and that, if networks were the common organisational form employed, the specific content of each network varied with the activities which were engaged in. There is therefore a need for the development of a typology of merchant-centred enterprise networks which is solidly based upon detailed case studies, preferably drawn from corporate and public archives, in which a full range of the factors contributing to investment and managerial decisions may be explored. Such a typology might embrace the distinction between organisations engaged in general import—export operations on the one hand and specific commodity trades on the other, resulting in differential opportunities for diversification along backwards and forwards linkages.
Another issue to be explored is whether inter-firm dynamics within a network create opportunities for diversification throughout the system, or